Often payments are received daily but bank runs are made less frequently, requiring a process for managing undeposited funds. The Undeposited Funds Account allows you to record payments against invoices while holding the checks until you are able to make the deposit. By holding the payments in this account you can roll them all together into a single deposit for ease of banking. This allows invoices to be marked as being paid even if you won’t be going to the bank for several days which results in more accurate reporting.
For example, you may do weekly check runs on Friday but receive payments all week. As deposits are received they are to be recorded in Intacct against the invoices they represent payment for. The difference here is that instead of receiving the payment into a specific bank account, the payment is received into this holding account. This is done by selecting as the Account Type of Undeposited funds, rather than selecting a bank account, when recording the payment. Once deposit day has arrived you will create your deposit slip using all the records waiting in the Undeposited funds account. Once this deposit slip is created the funds will be moved from this holding account to the actual bank account.
The Undeposited funds account is also useful when you receive a payment and you are unsure as to where the payment should be deposited. The payment can be recorded against the invoice immediately and the money can be held in the Undeposited funds account while you wait for confirmation.
When you are ready to record a payment navigate to the ‘Receive a Payment’ screen found at Accounts Receivable > All > Activities > Payments > Receive a Payment. In order to send this payment to the Undeposited Funds account you will select that as the Account type. When selecting the GL account you might be tempted to select the GL account that is associated with the bank account, but this is incorrect. You will typically select an undeposited funds GL Account that was setup for this purpose. In our example our GL Account is 1030 Undeposited Funds as shown below.
The remainder of the process of recording the payment is the same as detailed in last week’s blog post – Accounts Receivable – Receiving a Payment.
Once deposit day has arrived you will navigate to Cash Management > All > Activities > Deposits > Add. On the Deposit slip entry form you will select the filters required to locate all your payments and the click ‘Continue’. Your list of available undeposited payments will be populated below. Simply complete the deposit details, check off the deposits included in this bank run and click ‘Save’. Your charges will now be moved from the Undeposited GL account to the appropriate bank GL account.
Having a deposit record which accurately matches your bank deposit is important and Intacct makes it possible.